"We do not agree with the proposed salary hike for bank employees. The SBI employees demand that the increase should be at par with the salary of the Central government employees," AISBOF vice-president SK Haldar said here.

The Indian Banks Association (IBA) and United Federation of Banking Unions (UFBU) representing nine bank employee associations had agreed to the wage hike and pension benefits after a prolonged discussion in Mumbai yesterday.

Haldar, who was here to attend the zonal conference of the SBI Officers Association, said AISBOF will decide its future course of action on Tuesday.

The three lakh SBI employees are ready for an indefinite strike to demand a separate wage revision at par with Central government employees, he added.

The undersigned is directed to refer to DOP&T 0.M.No.310111412008-Estt.(A), dated 23rd September, 2008 allowing encashment of earned leave alongwith LTC and to say that various references are being received from MinistriesIDepartments with regard to the applicability of Rule 38-A of the CCS (Leave) Rules, 1972 to the Central Govt. employees. In this regard it is clarified that

(1) Central Govt. employees governed by CCS (Leave) Rules, 1972 who are entitled to LTC but opt for the facility of LTC provided to their spouses employed in PSUslCorporationlAutonomous Bodies etc. and

(2) Central Govt. employees governed by CCS (Leave) Rules, 1972 who are otherwise not entitled to LTC, on account of their spouse being employed in Indian Railways/National Airlines who are entitled to privilege passeslconcessional tickets are entitled to leave encashment while availing the LTC facility of their spouselprivilege passes/concessional tickets of their spouse on fulfillment of all the conditions as stipulated in Rule 38-A of the CCS (Leave) Rules, 1972 twice in a four years block of LTC.

Tuesday, November 24, 2009

For the 4,000-odd people who retired from the Reserve Bank of India (RBI) before 1997 and are now in their 70s, the new year will not start on a happy note as they will see their pensions reduced from January.

This is because of a government order that RBI has no power to update pension of its employees. This has been a bone of contention between the government and the central bank for the past one year. In 2003, RBI increased the pension of those who retired before 1997 by an administrative circular. The revision was based on pay drawn in 10 months prior to the retirement on a notional basis.

However, in October last year, in an internal circular, the central bank said, “as advised by government of India,” the updated pension scheme is withdrawn with immediate effect.

Protesting the move, the pensioners moved the Bombay High Court, which said they could represent to the government, which could dispose of the representation by a speaking order. The court said if the government order went against the petitioners, RBI would not reduce the pension for eight weeks from the time the speaking order was communicated to the petitioners. The government order, which went against the pensioners, was issued and communicated in the last week of October.

The decision will result in a loss of Rs 1,000-5,600 a month for these former RBI staffers, who are mostly septuagenarians. RBI would have incurred an additional cost of merely Rs 10 crore on updation. The government order said RBI did not have the power to update its pension scheme.

“As per RBI Pension Regulations, 1990, pension is to be calculated on the basis of the average of last 10 months pay drawn and not on the basis of notional pay. Further, there is no provision in the RBI Pension Regulations, 1990, to update pension,” said the finance ministry, adding, “RBI employees have an edge over central government employees on entitlement of gratuity, pay structure, revision of salary. If each service is allowed cherry picking of the best of other services, it will lead to an anarchical situation.”

The finance ministry said RBI’s pay structure was not comparable with that of central government employees for the reason that pay scales of RBI employees were revised after every five years, while for central government employees, the revision happenned after 10 years.

“There are no perquisites for central government employees while RBI employees are entitled to a host of perquisites,” the order said. It added that those who retired from RBI were much better placed than those who had worked for public sector banks as the central bank’s salary structure was much better.

The law ministry, which was consulted by the government, said pension regulations could not be amended through an administrative order but added that the employees of RBI, a statutory body, could not be equated with other central government employees as their pension was governed by regulations under the RBI Act.

The Indian Banks’ Association (IBA), which was consulted, also opposed the hike in pension saying a similar demand could be made on public sector banks. “Updation of pension may involve approximately an amount of Rs 1,042 crore (annually) for public sector banks, excluding the State Bank of India,” the government order said, quoting the IBA.

Sunday, November 22, 2009

Regarding introuduction of Non Functional scale of RS 8000-275-13500 to section officers of central Secratariate Service (CSS) and to say that the matter relating to pay fixation on grant of non-functional scale to Section Officers of CSS subsequent to implementation of CCS (Revised Pay) Ruls, 2008 has been considered in the Departmental of Personnel and Training in consultation with the Department of Expenditure. It has been clarified by Estt.(Pay) Division vide their U.O. No. 5/2/09- Estt.( Pay-I) dated 17/09/09 that at the time of grant of non-functional upgradation to Section Officers belonging to CSS, their pay fixation may be done under Rule 13 of CCs (Revised Pay) Rules, 2008 ie, they should be granted one increment @ 3% of their basic pay and to the figure so arrived at, the difference in grade pay [Rs. 5400 - Rs 4800 = Rs. 600] should be added. Further this dispensation may be implemented w.e.f 1-1-2006.

While approving the Report of the Sixth Central Pay Commission, the Government referred the matter related to the demandsmade in regard to pay scales of certain common category posts of Pharmacists was one of the items referred to the Committee. The recommendation of the Fast Track Committee regarding the pay scales of the common category posts of Pharmacists has sincebeen reveived. The Committee has recommended that the entry grade of Pharmacists in Central Government should remain at grade pay of Rs.2800 in the pay band PB-1. However, on completion of 2 years service in the entry grade, all the incumbents should be granted non-functional upgradation to the next higher grade having grade pay of Rs.4200 in the pay band PB-1 The recommendation of the Fast Track Committee regarding the pay scale of Pharmacists has been considered by the Government and it has benn decided to accept the same. Accordingly, the following pay structure is approved for the common category posts of Pharmacists cadre w.e.f. 1.1.2006 :- Pharmacist (Entry Grade) 4500-7000 Grade Pay of 2800 in PB-1 Entry grade for Pharmacist Cadre: Essential minimum educational qualifications of 10+2 plus 2 years Diploma in Pharmacy and Registration with State Pharmacy Council. Pharmacist II 5000-8000 Grade Pay of 4200 in PB-2 Pharmacist Gr.II and I will be merged and designated as Pharmacist (Non-Functional Grade.) This grade to be granted to Pharmacist (Entry Grade) on non-functional basis after 2 years of service in the grade pay of Rs.2800 Pharmacist I 5000-8000 Grade Pay of 4200 in PB-2 Pharmacist Gr.II and I will be merged and designated as Pharmacist (Non-Functional Grade.) This grade to be granted to Pharmacist (Entry Grade) on non-functional basis after 2 years of service in the grade pay of Rs.2800 Consequent upon the implementation of the above pay structure, promotion from Pharmacists (Entry Grade) to the next higher grade of Pharmacist (Non-Functional Grade) having grade pay of Rs.4200 will be delinked from vacancies and will become non-functional and time-bound. In the case of Organizations like the Ordnance Factory Board, where all the Pharmacists posts are presently in the grade pay of Rs.2800 in the pay band PB-1, the implementation of the above pay sturcture will result in the introduction of the new Non-Functional Grade having grade pay of Rs.4200 in the pay band PB-2

Wednesday, November 18, 2009

For the first time in the 23- year history of Navodaya Vidyalayas, over 20,000 employees of 576 Vidyalayas spread across the country resorted to a nation-wide token strike on Monday in protest against the Central Government’s alleged reluctance in implementing pension scheme. All the employees, including the principals of the Vidyalayas, particiapted in the day-long strike.

Raising the demand for a pension scheme, they launched an agitation on November 2. Over 6,000 employees took part in a Parliament march taken out on November 9. But following the government’s alleged neglect of their demand, the employees under the banner of the Joint Action Committee of Navodaya Vidyalaya Samithi Employees Association has decided to resort to a token strike.

Central steering committee member T.P.Mani and other office-bearers of the action committee, Mary P.Mani, Muralidharan Nair and K.N.Shaji, said that they had intimated the government of their decision to launch an indefinite strike from December 1, in the event of no favourable action from the government.

They said the Y.N.Chathruvedi Commission had recommended the government to implement pension scheme for the Jawahar Navodaya Vidyalaya employees in 1998. The various standing committees of Parliament also had recommended pension equivalent to the Kendriya Vidyalaya employees.

Wednesday, November 11, 2009

All persons who join public sector banks on or after April 1, 2010 would come under the government’s new pension system (NPS).

Public sector banks are set to hire 30,000-40,000 employees in the next two years, with about 35 per cent of the total staff set to retire by 2011.

“All new recruits would come under the NPS, the move would also give a push to the new system,” a senior finance ministry official said on the condition of anonymity.

Despite several incentives that were announced by Finance Minister Pranab Mukherjee in the Union Budget, there have been few takers for the NPS.

Trade unions have opposed the move to bring new employees under the NPS. “We are trying to find a solution,” CH Venkatachalam, general secretary, All India Bank Employees’ Association, told Hindustan Times. “We are holding talks with the government and the bank managements… to ensure that their rights are fully protected.”

The Pension Fund Regulatory and Development Authority Bill needs to be reintroduced in Parliament, as it had lapsed with the dissolution of the Lok Sabha before the general elections.

The government had made it mandatory for all central government employees who joined on or after January 1, 2004 to be brought under the NPS. Several public sector undertakings have also switched to the NPS for their employees.

Government officials say the bill is likely to be taken up in the forthcoming Parliament session, and that even though financial sector reforms are critical, the government would go ahead with them only when there is consensus among all coalition partners.

Sunday, November 8, 2009

The Central Administrative Tribunal (CAT) has held that a government employee cannot be granted voluntary retirement unless a scheme exists for the purpose. "In the absence of any VRS, neither any request for voluntary retirement can be made by an employee nor any such request can be given effect to by any employer," the tribunal said. The CAT, comprising members D P Sharma and N D Dayal, passed the order on the plea of M L Jain, Vice-President of Indian Tourism Development Corporation (ITDC) here, challenging the government's order to relieve him from service. In its ruling, the tribunal ordered reinstatement of the officer and directed the government to give all his benefits, including arrears and salary. Earlier, the government had transferred Jain to another city but he requested deferment of the order till the time of his daughter's marriage, a request which was pending. Jain then opted for voluntary retirement scheme (VRS) but later withdrew the same after his request for deferment of his transfer was granted. Later, the government did not consider Jain's withdrawal of the VRS application and relieved him from the service. The tribunal said the order of the government in 2005 of relieving him from service was "vitiated" as no VRS was in operation at that time.

The Employee Provident Fund Organisation (EPFO) has sent a proposal to the labour ministry to increase the salary limit for paying employee provident fund (EPF) to Rs 10,000 from the current Rs 6,500.

It has also proposed covering companies with a minimum of 10 employees under the Employee Provident Fund and Miscellaneous Provisions Act (EPF & MP Act), 1952, against the present norm of a minimum of 20 employees.

A source close to the development said: “The current norms in EPF & MP Act, 1952, results in millions of workers being left out of the EPFO regulations. Therefore, we have proposed to the government to raise the salary cap and to lower the limit on the worker count in an establishment to be covered by EPFO.”

WIDER UMBRELLA

* Current norms in EPF & MP Act, 1952, results in millions of workers being left out of the EPFO regulations

* The organised labour sector comprises 300 million workers, of which only 40 million are covered under EPFO regulations

* If the proposal is approved by Parliament, the EPFO is likely to cover 50% of the organised labour market

* At present, employers have to contribute a minimum of 12 per cent towards EPF on less than or up to Rs 6,500 (basic + dearness allowance)

* This move will especially help contractual workers. They are the biggest concerns because they are often illiterate

The organised labour sector comprises 300 million workers, of which only 40 million are covered under EPFO regulations. Sources said if the proposal were approved by Parliament, the EPFO was likely to cover 150 million workers in the organised sector, which would be 50 per cent of the organised labour market. The proposal is awaiting the ministry’s approval.

Manish Sabharwal, co-founder and chairman, TeamLease Services, however, said a chunk of these 300 million workers are state- and central-government employees. “The EPFO should first concentrate on covering the private and public sectors in totality before expanding its base any further.” He felt that matters would become more complicated for the organisation if the base were expanded.

At present, employers have to contribute a minimum of 12 per cent towards EPF on less than or up to Rs 6,500 (basic + dearness allowance).

This move will especially help contractual workers. Many smaller firms, which work as contractors to bigger firms, are not obliged to honour the EPF Act. “But in the case of contractual workers, their supervisor pays a lump sum without segregation, due to which their basic-plus-DA earning exceeds the limit of Rs 6,500, so that they need not be registered under the Act,” said the source.

The source added that contractual workers were the biggest concerns because they were often illiterate. Since their employers paid them more than the government prescribed cap, the EPFO could not penalise them. If the government approved the EPFO proposals, these people stood to benefit.

The change in the limit, if approved, could be an important move because of rising salaries over the years. But smaller industries, like the beedi industry, which pay a lower rate of 10 per cent, because of lower turnover, would see a higher outgo if this regulation is implemented.

Friday, November 6, 2009

In a few months' time the taxman will coming knocking on your door. However, he cannot tax you on the following 14 important items of income and receipts, as they are fully exempt from income tax and which a resident individual Indian assessee can use with profit for the purpose of tax planning.

1. Agricultural income

Under the provisions of Section 10(1) of the Income Tax Act, agricultural income is fully exempt from income tax.

However, for individuals or HUFs when agricultural income is in excess of Rs 5,000, it is aggregated with the total income for the purposes of computing tax on the total income in a manner which results into "no" tax on agricultural income but an increased income tax on the other income.

2. Receipts from Hindu undivided family (HUF)

Any sum received by an individual as a member of a Hindu undivided family, where the said sum has been paid out of the income of the family, or, in the case of an impartible estate, where such sum has been paid out of the income of the estate belonging to the family, is completely exempt from income tax in the hands of an individual member of the family under Section 10(2).

3. Allowance for foreign service

Any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India, rendering service outside India, are completely exempt from tax under Section 10(7).

This provision can be taken advantage of by the citizens of India who are in government service so that they can accumulate tax-free perquisites and allowances received outside India.

4. Gratuities

Under the provisions of Section 10(10) of the IT Act, any death-cum-retirement gratuity of a government servant is completely exempt from income tax.

In respect of private sector employees, however, gratuity received on retirement or on becoming incapacitated or on termination or any gratuity received by his widow, children or dependants on his death is exempt subject to certain conditions.

The maximum amount of exemption is Rs 3,50,000. Of course, this is further subject to certain other limits like the one half-month's salary for each year of completed service, calculated on the basis of average salary for the 10 months immediately preceding the year in which the gratuity is paid or 20 months' salary as calculated. Thus, the least of these items is exempt from income tax under Section 10(10).

5. Commutation of pension

The entire amount of any payment in commutation of pension by a government servant or any payment in commutation of pension from LIC pension fund is exempt from income tax under Section 10(10A) of IT Act.

However, in respect of private sector employees, only the following amount of commuted pension is exempt, namely:

(a) Where the employee received any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive; and

(b) In any other case, the commuted value of half of such pension.

It may be noted here that the monthly pension receivable by a pensioner is liable to full income tax like any other item of salary or income and no standard deduction is now available in respect of pension received by a tax payer.

6. Leave salary of central government employees

Under Section 10(10AA) the maximum amount receivable by the employees of central government as cash equivalent to the leave salary in respect of earned leave at their credit upto 10 months' leave at the time of their retirement, whether on superannuation or otherwise, would be Rs 300,000.

7. Voluntary retirement or separation payment

Under the provisions of Section 10(10C), any amount received by an employee of a public sector company or of any other company or of a local authority or a statutory authority or a cooperative society or university or IIT or IIM at the time of his voluntary retirement (VR) or voluntary separation in accordance with any scheme or schemes of VR as per Rule 2BA, is completely exempt from tax.

The maximum amount of money received at such VR which is so exempt is Rs 500,000. As per Finance (No. 2) Act, 2009 an assessee cannot enjoy both the exemption in respect of VRS upto Rs 500,000 and also a deduction under Section 89.

8. Life insurance receipts

Under Section 10(10D), any sum received under a Life Insurance Policy, including the sum allocated by way of bonus on such policy, other than u/s 80DDA or under a Keyman Insurance Policy, or under an insurance policy issued on or after 1.4.2003 in respect of which the premium payable for any of the years during the term of the policy exceeds 20% of the actual capital sum assured, is fully exempt from tax.

However, all moneys received on death of the insured are fully exempt from tax Thus, generally moneys received from life insurance policies whether from the Life Insurance Corporation or any other private insurance company would be exempt from income tax.

9.Payment received from provident funds

Under the provisions of Sections 10(11), (12) and (13) any payment from a government or recognised provident fund (PF) or approved superannuation fund, or PPF is exempt from income tax.

10. Certain types of interest payment

There are certain types of interest payments which are fully exempt from income tax u/s 10(15). These are described below:

(i) Income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification in the Official Gazette, specify in this behalf.

(iia) In the case of an individual or a Hindu Undivided Family, interest on such capital investment bonds as the Central Government may, by notification in the Official Gazette, specify in this behalf (i.e. 7% Capital Investment Bonds);

(iib) In the case of an individual or a Hindu Undivided Family, interest on such Relief Bonds as the Central Government may, by notification in the Official Gazette, specify in this behalf (i.e., 9% or 8.5% or 8% or 7% Relief Bonds); (iid) Interest on NRI bonds;

(iiia) Interest on securities held by the issue department of the Central Bank of Ceylon constituted under the Ceylon Monetary Law Act, 1949;

(iiib) Interest payable to any bank incorporated in a country outside India and authorised to perform central banking functions in that country on any deposits made by it, with the approval of the Reserve Bank of India or with any scheduled bank;

(iv) Certain interest payable by Government or a local authority on moneys borrowed by it, including hedging charges on currency fluctuation (from the AY 2000-2001), etc.;

(v) Interest on Gold Deposit Bonds;

(vi) Interest on certain deposits are: Bhopal Gas victims;

(vii) Interest on bonds of local authorities as notified, and

(viii) Interest on 6.5% Savings Bonds [Exempt] issued by RBI

(ix) Stipulated new tax free bonds to be notified from time to time.

11. Dividends on shares and units - Section 10(34) & (35)

With effect from the Assessment Year 2004-05, the dividend income and income of units of mutual funds received by the assessee completely exempt from income tax.

With effect from FY 2004-05, any income arising to a taxpayer on account of sale of long-term capital asset being securities is completely outside the purview of tax liability especially when the transaction has been subjected to Securities Transaction Tax.

Thus, if the shares of any company listed in the stock exchange are sold after holding it for a minimum period of one year then there will be no liability to payment of capital gains.

This provision would even apply for the old shares which are held by an assessee and are sold after the Finance (No.2) Act, 2004 came into force.

13. Amount received by way of gift, etc - Section 10(39)

As per the Finance (No.2) Act, 2004, gift, etc. received after 1-9-2004 by individual or HUF in cash or by way of credit, etc. is being subjected to tax if the same is not received from relative, etc. However, Section 56(2) provides that the amount received to the extent of Rs 50,000 will, however, be exempt from the purview of income tax.

Similarly, amount received on the occasion of marriage from a non-relative, etc. would also be exempted. It may be noted that the gift from relatives. as mentioned in the Section can be received without any upper limit.

Any transfer of a capital asset in a transaction of reverse mortgage for senior citizens under a scheme made and notified by the Central Government would not be regarded as a transfer and therefore would not attract capital gains tax. The loan amount would also be exempt from tax.

These amendments by the Finance Act, 2008 apply from FY 2007-08 onwards.

Thursday, November 5, 2009

There is a silent transformation in government offices these days. The faded and often wrinkled work uniforms worn by some government

employees are now being replaced by classier corporate workwear, thanks to new cloth sourcing norms by the government’s purchase departments.

The Central Vigilance Commission office, a central regulatory authority, which decides on the rules and regulations for the government’s tendering process, has asked all public sector units, armed forces and state-governed bodies to insist on “composite mills” in their tenders for procuring any kind of textiles. Simply put, only composite mills — a textile facility where weaving, spinning and processing is integrated and done under a single roof — can bid for textile-related tenders.

The advantage of such mills is that since the three crucial stages of making textiles happens under single roof, quality is consistent even in large-scale production. Whereas, in the case of power looms the production capacities are not as big as composite ones, due to which one has to often compromise on colour or quality. Additionally, with composite mills, the customer can be supplied with cloth as per his specifications while a powerloom-made cloth cannot by uniform in its specifications. Till now, unorganised players or commission agents used to walk away with such tenders after quoting the lowest price. The cheap quotations ensured that these agents delivered inferior quality cloth often procured from individual powerlooms.

Apart from the general public and employees who will welcome the sartorial change, organised textile players are also cheering, especially as these firms had been hit by the slowdown in textiles. The CVC diktat has provided a good business opportunity for such textile mills as the size of a typical government textile tender is estimated to be over Rs 2,000 crore a year.

Nitin S Kasliwal, CEO and MD of S Kumars Nationwide said: “This move will help in checking the activities of small and medium level players who are awarded tenders due to the cost advantage. However, such players are unable to deliver on time and compromise on quality as they depend on smaller manufacturers to fulfil the order.”

SKNL is supplier to ONGC, Air India, BPCL and Indian Army. “State-owned mills will benefit since now they will have better quality textiles, but they should be more specific while floating tenders,” says RK Dalmiya, president of the Mumbai-based Century Textiles. “Often tenders are not clear about particular needs which confuse participants. This will make the process more transparent as the tender also insists on prior experience and ISO certifications,” he added.

Raghunath MB, a director with Mafatlal Fabrics says the step will help both textile mills and the government. “As all processes are done in a single location, it ensures consistent quality which is not possible otherwise. Also, such a large order scale for organised players has come at the right time.”

The Mafatlal group supplies cloth to state-owned firms such as Hindustan Aeronautics, ONGC, BPCL and Airports Authority of India.

Tuesday, November 3, 2009

Government has disclosed that it will not be sanctioning the Leave Travel Allowance for employees using cars, personal or taxi for transportation purposes. But there is an exemption for disabled employees or if any of the family members is disabled, who is the dependent of the employee.

The central government employees can now avail LTA only by using Indian Railways or Air India and state transport corporation buses.

According to the order from Department of Personnel, LTA will be sanctioned only for those journeys made in vehicles "operated by the government or any corporation in the public sector run by the Central government, state government or a local body".

Even though the disabled have been exempted, medical certificate from the an experienced authority should be produced, along with the proof that the concerned person cannot use the mode specified by the government for travelling and the same can be only covered in car.

Besides, such claim should not be more than the journey performed by the entitled class by rail or air